Mergers and Acquisitions under Common Ownership

Abstract

We provide new facts about the cross section and evolution of mergers and acquisitions for US public firms. Using a general equilibrium model with a hedonic demand system and data on institutional ownership, we document that mergers are increasingly concentrated among firm pairs with a high degree of product market interaction and a moderate to high degree of common ownership. We estimate how much mergers have raised aggregate corporate profits and reduced consumer surplus and quantify how the anticompetitive effects of mergers are affected by common ownership and shareholder value maximization motives.